Fannie Mae-No Politics (FNMA)

[kthomp19]

calling all donkeys


where are the donkeys???????????

They've been posting here all day. Really coming out of the woodwork.

The time looks pretty ripe for a short FNMA/long FMCC pair trade. They should be trading around parity because even if FNMA holders file a lawsuit for breach of implied covenant, they will get at most a penny or two more per share than FMCC holders, and that's only if pre-judgment interest is awarded.

I can understand FNMA being more valuable than FMCC in the endgame because Fannie is much closer to its statutory capital requirements (once the senior prefs are converted or written down) than Freddie. But we're not close to the endgame yet.